CNY Rates: PBOC monetary policy adjustment
PBOC monetary policy adjustments.
Group Research - Econs, Samuel Tse18 Jun 2026
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The CNY and CNH rates remain largely steady following the PBOC’s announcement of monetary policy adjustments at the Lujiazui Forum. PBOC Governor Pan Gongsheng has announced improvements to repo operations by setting temporary overnight reverse repo and repo operation rates at 25bps above and below the 7-Day reverse repo rate, effectively narrowing the interest rate corridor from 70bps to 50bps. This range compares to the 25bps corridor of the Fed Funds Rate. Market takes this as a signal for potential shift from the 7-Day Reverse Repo Rate towards the overnight rate as the primary policy rate—analogous to the Fed Funds Rate and other central bank policy rates. In our view, the 7-Day rate is expected to remain as the policy anchor in the near-term. Rather than changing the policy rate architecture, the technical adjustment aims at lowering the volatility of front-end rates. This could potentially compress term premiums. A steady funding cost also best serves the progression of RMB internationalization.

The Foreign and International Monetary Authorities (FIMA) repo facility is the second major announcement. By allowing foreign central banks to post CGBs as collateral for yuan liquidity, offshore CNH rates should stay anchored. Sufficient liquidity is expected to foster RMB internationalization, thereby aiding CGB demand and dim sum bond issuance.

Policy backdrop aside, sobering macro data (see: China note) points to anchored CNY rates across the curve. The 5Y CGB auction, which settled at a record-low yield of 1.41%, reflects the rates market's verdict. The 10Y CGB yield has also returned to 1.73% after rebounding to 1.75% last Friday. May retail sales registered the first contraction of -0.6% YoY since the post-Covid reopening. Outstanding loan growth continues to weaken, reaching a two-decade low of 5.5% YoY. Weak credit demand is putting a ceiling on CGB yields, particularly in the belly to long end of the curve.



Samuel Tse 謝家曦

Rates Strategist - Asia 利率策略师 - 亚洲
[email protected]




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